Editorial comment:  This is a scare tactic by the IRS, who has no legal authority to compel alleged employers to withhold unless the income derives from foreign sources outside the continental United States of America.--CH

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Employers should expect to see more employment tax prosecutions as the agency's operating divisions improve audit coverage, according to an Internal Revenue official. Employment tax crimes will increasingly be the focus of the Internal Revenue Service's Criminal Investigation (CI) division and, said Mark Matthews, Criminal Investigation Chief, speaking at a meeting of the American Bar Association Section of Taxation.

CI's closer working relationship with the examination and collection units in the Small Business/Self-Employed division, especially now that there are fraud specialists whose only job is to advise operating division staff, will result in the development of more cases suitable for prosecution, Matthews said.

A related story, "Prison for Payroll Tax Violators Pursued; IRS Alerts Public to Withholding Violations," appeared in PAG Newsletter, 2/28/01.

Subscribers to Payroll Library on the Web can view the story by clicking on http://subscript.bna.com/py.nsf/r?Open&a=0521_01

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